LONDON, Nov 3 (Reuters) - Emerging stocks were on track for a solid weekly rise on Friday, though currency markets were jittery ahead of U.S. jobs data with inflation fears rattling Turkey’s lira.
MSCI’s emerging market index edged higher on the day and looked to add 1.6 percent over the week thanks to solid gains in Asia, where bourses traded within sight of their recent decade highs and Seoul stocks closed at a fresh record high.
The daily gains came after investors guardedly welcomed plans for a massive U.S. tax cut and took some comfort from President Donald Trump tapping Fed Governor Jerome Powell to become head of the U.S. central bank, signalling a continuation of Janet Yellen’s cautious monetary policies.
“(Emerging stocks) are really being driven by G7 equities and that in turn is being driven by the tax cut expectations from the U.S.,” said Simon Quijano-Evans, emerging markets strategist at Legal & General Investment Management.
However, losses in Chinese mainland stocks tempered gains, with Shanghai on track to post the worst week since August on heightened worries over an economic slowdown.
Despite the dollar treading water, currencies suffered as gains in key U.S. employment data due later in the day could seal the case for the Federal Reserve to raise interest rates in December.
Turkey’s lira racked up some of the biggest losses after data showed inflation spiked by more than expected with annual price increases hitting a nine-year high of 11.9 percent, adding to the central bank’s quandary.
The lira weakened 0.8 percent against the dollar, flirting again with the 10-month low hit last week, and on track for a 1 percent fall since Monday in its eighth straight week of losses.
Spreads of Turkish local government benchmark debt over U.S. Treasuries rose to their widest since 2011.
“Given that inflation is surprising everybody on the upside, the expectation is that it’s not positive for the lira until we get some sort of policy reaction or message from the monetary authorities,” Quijano-Evans said, adding that other higher beta currencies such as the rand were also getting hit.
South Africa’s rand weakened 0.6 percent on the day, on track to end the week lower as data showed private sector activity shrank again with both output and new orders falling.
Despite higher oil prices, Russia’s rouble eased 0.6 percent on the day as data showed the service sector growing at the lowest pace in three months and companies faced debt repayments in the fourth quarter. Both the rand and rouble are in their third straight week in the red.
Meanwhile, Venezuela announced late on Thursday plans to restructure "all future payments" on its burgeoning foreign debt, a move that may lead to a default by the cash-strapped OPEC nation whose collapsing socialist economy has left its population struggling to find food and medicine. For GRAPHIC on emerging market FX performance 2017, see tmsnrt.rs/2e7eoml For GRAPHIC on MSCI emerging index performance 2017, see tmsnrt.rs/2dZbdP5
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see) Emerging Markets Prices from Reuters Equities Latest Net Chg % Chg % Chg
Morgan Stanley Emrg Mkt Indx 1128.98 +1.67 +0.15 +30.93
Czech Rep 1058.80 -7.40 -0.69 +14.89
Poland 2506.30 +4.90 +0.20 +28.67
Hungary 39742.02 -407.84 -1.02 +24.18
Romania 7803.74 +27.35 +0.35 +10.14
Greece 0.00 +0.00 +0.00 -100.00
Russia 1124.20 +5.54 +0.50 -2.44
South Africa 53119.30 +273.67 +0.52 +21.00
Turkey 12980.18 -14.68 -0.01 +44.59
China 3371.21 -12.10 -0.36 +8.62
India 33651.94 +78.72 +0.23 +26.39
Currencies Latest Prev Local Local
close currency currency
% change % change
Czech Rep 25.68 25.68 +0.00 +5.17
Poland 4.24 4.23 -0.11 +3.92
Hungary 310.83 310.79 -0.01 -0.65
Romania 4.59 4.60 +0.08 -1.28
Serbia 118.54 118.61 +0.06 +4.06
Russia 58.47 58.18 -0.49 +4.77
Kazakhstan 334.22 334.75 +0.16 -0.17
Ukraine 26.96 26.93 -0.11 +0.14
South Africa 14.08 13.97 -0.78 -2.46
Kenya 103.55 103.65 +0.10 -1.14
Israel 3.51 3.51 -0.09 +9.72
Turkey 3.83 3.80 -0.83 -7.88
China 6.63 6.61 -0.32 +4.76
India 64.60 64.57 -0.05 +5.17
Brazil 3.27 3.27 -0.00 -0.42
Mexico 19.05 18.98 -0.37 +8.72
Debt Index Strip Spd Chg %Rtn Index
Sov’gn Debt EMBIG 304 0 .00 8 07.64 1
Reporting and graphic by Karin Strohecker, additional reporting by Claire Milhench